Lesotho Declares State of Disaster as Trump Tariff Wipes Out Textiles Industry

For over two decades, the textiles and apparel industry served as Lesotho’s primary economic engine, transforming the nation into one of Africa's most significant garment makers. The remarkable growth story began in the early 2000s, when international manufacturers recognised strategic advantages: a skilled workforce, relatively stable political environment, and crucially, preferential access to lucrative Western markets through comprehensive trade agreements.

The sector's is more than important. It employed 35,000 people before the tariffs, with at least eight manufacturers employing 12,900 workers, exporting garments to the US market under AGOA. The industry accounted for more than 10% of the country's $2.27 billion GDP (2024 estimate). These jobs have provided crucial employment opportunities, particularly for women who constitute the majority of the workforce. The sector became a cornerstone of female economic empowerment in a country where traditional employment opportunities remain limited.

The foundation of textile success was the African Growth and Opportunity Act (AGOA), which provided duty-free access to the United States for qualifying African nations. Under this programme, textile exports flourished, with the country becoming a major supplier of denim jeans, including products for international brands like Levi's. The preferential access allowed effective competition with Asian manufacturers, despite higher labour costs and logistical challenges.

The Lesotho industry's rapid growth attracted significant foreign investment, with companies from China, Taiwan and South Africa establishing manufacturing facilities in and around the capital, Maseru. These factories became hubs of economic activity, supporting not only direct employment but also creating opportunities for local suppliers, transporters, and service providers. The interconnected network highlights the industry's critical role in the national economy.

This also created a complex ecosystem of supporting industries, from cotton processing to packaging and logistics. Local entrepreneurs established businesses to serve the factories, creating a multiplier effect that extended the economic impact far beyond the factory gates. This interconnectedness of businesses and workers has possibly made it worse for the broader economy.

Arguably, this Lesotho story had its inherent vulnerabilities. Heavy dependence on a single sector and preferential trade arrangements exposed the economy to external shocks. The concentration of exports in textiles and apparel, combined with reliance on a single major market, created a precarious economic foundation. Industry analysts have long warned about the risks of over-dependence on AGOA. All those warnings are now coming home to roost. In fact, it already has.

The textile industry's vulnerability had become apparent even during previous global crises, including the 2008 financial crisis and the COVID-19 pandemic, when demand fluctuations and supply chain disruptions significantly impacted production. However, none of these previous challenges compare to the current crisis triggered by the Trump administration's tariffs, which threaten to fundamentally undermine the industry's competitiveness in its most important market.

The economic catastrophe began to unfold on 3 April itself, when President Donald Trump imposed a 50% tariff on imports from the small African nation. This punitive measure, described as the highest imposed on any single nation, formed part of Trump's broader "Liberation Day" tariff package targeting various countries based on their trade surpluses with the United States.

The Trump administration's justification for these extreme measures rested on claims that Lesotho imposes high tariffs on American goods, though the WTO reports the average applied tariff as 7.8% (2024). Officials in Maseru were bewildered at how the US arrived at such numbers, particularly given that the country imports most goods from neighbouring South Africa rather than from American suppliers. The calculation methodology appeared to involve dividing the trade deficit by the value of US imports, though this significantly differs from standard tariff measurements. The geographical and economic realities of being surrounded by South Africa make largescale imports from the United States logistically challenging and economically unviable.

The immediate impact has been catastrophic, and the human cost has been immediate and severe. Factories have been forced to close their doors, with workers receiving redundancy notices. The workforce, many of whom serve as sole breadwinners for their families, have found themselves unemployed overnight. The social implications extend beyond individual families, affecting entire communities that have grown around the textile industry.

Thabo Qhesi, a Maseru-based independent economic analyst, warned that the US tariff "is going to kill the textiles and apparel sector."He predicted that factory closures would create multiplier effects throughout the economy, potentially devastating the entire nation's economic prospects.

And, when the government declared a State of Disaster, no one was surprised. The emergency declaration enables the government to implement extraordinary measures to address the economic crisis. The decision is recognition of the severity of the situation facing the tiny nation.

Worse, the absence of relief measures has compounded the industry's struggles. The US has granted no pauses or exemptions for the tariffs, with temporary relief only discussed for AGOA beneficiaries after potential renewal. This has left textile manufacturers without recourse, as they continue to face significant redundancies and factory closures. The uncertainty surrounding the duration and scope of the tariff measures has prevented meaningful economic recovery, with businesses unable to plan for the future or commit to new investments. All eyes turn to the WTO's October 2025 ruling on the tariff's legality. The WTO is scheduled to rule on the tariff's legality in October.

The long-term implications of the tariff crisis extend beyond the obvious job losses. The country now faces the prospect of widespread social instability as unemployment rates surge and poverty levels increase. With youth unemployment already a significant challenge, the textiles industry crisis has exacerbated existing problems and created new ones.

The government's response to the crisis has been comprehensive but faces challenges in addressing the scale of the problem. Prime Minister Matekane announced plans to create employment opportunities and stimulate economic activity, but these initiatives require substantial resources and time to implement effectively. The challenge lies in creating alternative employment opportunities for the thousands of displaced workers who may never return to their previous occupations.

The crisis has also highlighted the urgent need for economic diversification, a challenge that successive governments have recognised but failed to address. Over-reliance on textiles and preferential trade arrangements has left the economy vulnerable to external shocks. The government is now exploring opportunities in other sectors, including agriculture, tourism, and renewable energy.

The agricultural sector, which employs a large portion of the rural population, offers potential for expansion and modernisation. However, the country's mountainous terrain and limited arable land present significant challenges. Tourism, based on the country's natural beauty and cultural heritage, could provide alternative employment opportunities, but requires substantial infrastructure development and marketing efforts. Micro-hydro power represents another potential growth area, given water resources, though large-scale renewable energy development remains limited.

The Lesotho government has been engaging with diplomatic partners and exploring alternative markets for textile exports, though the size of the US market and established supply chains make it difficult to quickly replace lost American business. The Southern African Development Community (SADC) and other regional bodies have been approached for support, but their capacity to provide immediate relief remains limited.

The fate of the AGOA, which was extended to 2035 via the AGOA Renewal and Improvement Act of 2024, provides some long-term certainty for the industry. While the Trump tariffs have done their damage, the extension maintains preferential access to American markets for qualifying exports. The programme's renewal depends on broader US policy decisions and the political relationship between Washington and African nations. Changes to trade policies could compound the existing crisis, though the current tariffs have already fundamentally undermined the industry's competitiveness.

One way out is to leverage the African Continental Free Trade Area (AfCFTA). The crisis has served as a catalyst for re-evaluating trade relationships with major powers and exploring opportunities for increased intra-African trade. However, these longer-term strategic shifts offer little immediate relief to the thousands of workers currently facing unemployment and economic hardship.

The crisis highlights vulnerabilities faced by small, developing economies in an unpredictable global trade environment. Lesotho's experience demonstrates the double-edged nature of preferential trade arrangements---while driving growth on the one hand, they create dangerous dependencies and expose nations to larger powers' political whims.

The international community's response to the plight will be crucial in determining Lesotho’s ability to recover and rebuild. As one of the world's least developed countries, the nation lacks the resources to single-handedly overcome the current crisis. Till then, the State of Disaster will remain.